When buying or selling property, unexpected issues can arise that threaten to delay or even derail the transaction. One of the most common problems is a missing building regulations certificate for work that has been carried out on the property. This can cause understandable concern. Lenders, buyers and solicitors all want certainty that any structural alterations, electrical installations or other regulated works comply with the law. Where that evidence is missing, an indemnity policy can often provide a practical solution.
At Blackstone Solicitors, we assist clients throughout England and Wales with understanding and obtaining indemnity insurance for lack of building regulations. This guide explains what the policy covers, when it is used and what buyers and sellers need to know.
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Understanding Building Regulations
Building regulations govern a wide range of construction related matters. They exist to ensure that buildings are safe, energy efficient and structurally sound. The regulations cover many types of work, including extensions, loft conversions, removal of load bearing walls, significant electrical rewiring, drainage alterations and more. If the work requires approval, the homeowner or builder should obtain either a completion certificate from the local authority or a compliance certificate from an approved inspector.
In practice, certificates can go missing. Sometimes the seller never obtained one. Sometimes the work was done many years ago and the paperwork has been misplaced. It is also common for homeowners to inherit issues from previous owners without realising.
When such gaps are discovered during the conveyancing process, an indemnity policy is often proposed to allow the sale to continue.
What Is an Indemnity Policy for Lack of Building Regulations
An indemnity policy is a type of insurance designed to protect the buyer and their lender if the local authority takes enforcement action due to missing building regulations approval. It does not certify that the work is safe. Nor does it fix any defects that may exist. Instead, it provides financial protection if something goes wrong and official enforcement creates a loss.
The policy usually lasts indefinitely and transfers automatically to future owners. Lenders accept these policies because they reduce the risk of financial loss tied to enforcement or legal action.
Indemnity insurance is not a substitute for proper compliance, but it is a practical way to deal with issues when retrospective approval is not feasible.
When Do You Need an Indemnity Policy for Missing Building Regulations
Not every situation requires indemnity insurance. In many cases it depends on the nature of the work and the level of comfort required by the buyer or lender. Below are the most common scenarios where a policy is recommended.
Missing or Misplaced Certificates
If the work definitely required approval but the certificate cannot be found, insurers will usually provide a policy provided the work was completed more than a year ago and the local authority has not been contacted about it.
Works Carried Out by a Previous Owner
Many sellers discover issues only during the conveyancing process. If they cannot confirm whether approval was obtained, an indemnity policy is often the quickest solution.
Mortgage Lender Requirements
Most lenders insist on certainty. If there is no evidence of compliance, they may require an indemnity policy before releasing funds.
Seller Wants to Avoid Retrospective Approval
Applying for retrospective approval can prompt the local authority to inspect the work, which might uncover problems. Sellers often prefer indemnity insurance because it avoids triggering local authority involvement.
What Does the Policy Cover
The policy usually covers financial loss arising from enforcement action by the local authority. This may include the cost of altering or removing the works, legal fees, loss in property value and other expenses linked to a formal enforcement notice.
The policy only covers losses caused by local authority enforcement. It does not cover physical defects or safety issues that may exist in the works themselves. This distinction is important. Indemnity insurance is about legal risk rather than structural quality.
Some policies will also cover lender losses if the property has to be sold at a lower price due to enforcement concerns.
What Is Not Covered by an Indemnity Policy
An indemnity policy has limits. Buyers and sellers should understand what the insurance does not protect against.
No Cover for Poor Workmanship
If the work is unsafe or defective, the policy will not pay for repairs. A survey may identify physical issues, but insurance for lack of building regulations is not intended to address them.
No Cover if the Local Authority Has Already Been Contacted
If anyone has already contacted the local authority to ask about the missing certificate, insurers will not offer a policy. This is because the risk is no longer unknown. Once the authority is aware, enforcement becomes more likely.
No Cover for Future Works
If the buyer later carries out further alterations without approval, the original policy does not extend to those works.
No Cover for Voluntary Disclosure
If, after buying the policy, the homeowner contacts the local authority, the cover may become invalid.
Understanding these limitations helps prevent misunderstandings during the conveyancing process.
How Much Does an Indemnity Policy Cost
The cost of an indemnity policy varies, though most policies are relatively inexpensive compared with the potential cost of enforcement. Many policies fall within a range that buyers and sellers consider manageable.
Prices depend on the type of work involved and the level of cover required. For example, a simple policy for a missing certificate relating to a small alteration may cost far less than one for a major structural change such as a significant extension.
The seller often pays, particularly where they cannot produce the required paperwork. However, this can be negotiable.
How Long Does It Take to Obtain an Indemnity Policy
One advantage of indemnity insurance is speed. Policies can usually be arranged on the same day, and often within a few hours. This makes them particularly attractive where the conveyancing process is at risk of delay.
The solicitor simply provides key details to the insurer, including the type of work carried out, the approximate date of the work and confirmation that the local authority has not been contacted.
Because the process is fast, indemnity insurance often becomes the most practical route forward.
Should You Consider Retrospective Building Regulations Approval Instead
In some situations, retrospective approval is an option. Known as regularisation, this involves applying to the local authority for formal approval after the work has already been completed.
Regularisation can give the buyer more confidence, particularly if the work is recent or concerns safety critical elements. However, it has drawbacks. The authority may require invasive inspections. They may ask for alterations or improvements. In some cases they may refuse approval altogether.
The process is also slower and may delay the property transaction. This is why many sellers prefer indemnity insurance. Buyers, however, may weigh the long term value of genuine compliance.
Whether to pursue regularisation or opt for indemnity insurance depends on the nature of the work and the buyer’s risk tolerance.
Why Lenders Accept Indemnity Policies
Mortgage lenders want to ensure that the property is good security. Missing building regulations documentation creates uncertainty. Enforcement action could force alterations or reduce the value of the property.
Indemnity insurance provides protection against those risks. It gives lenders assurance that financial loss will be covered if the local authority intervenes. Because the risk of enforcement is usually low after several years have passed, lenders tend to accept the policy as adequate.
How Blackstone Solicitors Can Help
At Blackstone Solicitors, we guide clients through the complexities of missing building regulations documentation. We advise buyers and sellers across England and Wales on whether an indemnity policy is appropriate, what it covers and how it affects the conveyancing process.
Our team can assess your situation quickly, explain the options clearly and arrange the required insurance without delay. We also help clients understand when regularisation may be a better route, and we ensure that all documentation is properly handled to avoid issues further down the line.
Buying or selling a property should be as smooth as possible. With specialist legal advice, many common hurdles can be managed effectively.
We have a proven track-record of helping clients deal with indemnity policies. We are a multidisciplinary firm and have all the expertise inhouse to satisfy the most exacting requirements of our clients. We will guide you through all the necessary legal due diligence in a comprehensive and timely manner. We firmly believe that with the right solicitors by your side, the entire process will seem more manageable and far less daunting.
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How to Contact Our Residential Property Solicitors
It is important for you to be well informed about the issues and possible implications of buying a property without building regulations approval. However, expert legal support is crucial in terms of ensuring a positive outcome to your purchase.
To speak to a member of our New Enquiries Team today, simply call us on 0345 901 0445, or click here to make a free enquiry. We are well known across the country and can assist wherever you are based. We also have offices based in Cheshire and London.
Disclaimer: This article provides general information only and does not constitute legal advice on any individual circumstances.
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